UK: Carphone Warehouse ends Best Buy joint venture and exits French market
- Credit: PA
CARPHONE Warehouse has called time on its joint venture with US giant Best Buy by agreeing a cut-price deal to buy back its 50% stake.
The mobile retailer will pay £471million in cash and shares to buy out Best Buy, marking the end of a five-year tie-up between the two firms and seeing Best Buy retreat from its costly foray into Europe.
Best Buy, one of world’s biggest names in electronics retailing, paid £1.1billion for a 50% stake in the European partnership in 2008 with the aim of taking on the likes of Dixons Retail.
But the plan proved too ambitious, with Carphone closing the 11 “big box” shops opened in conjunction with Best Buy in 2011.
Carphone also exited a US partnership with Best Buy in 2011, selling back its stake for more than £830m.
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Carphone boss Roger Taylor said both groups would now focus on operations in their respective domestic markets.
“Both parties have agreed that this is a good time for us to bring the joint venture to an end, whilst ensuring that our relationship remains in place by way of our global buying alliance,” he added.
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Carphone will fund £80m of the deal through an investor cash call, by placing more than 47m shares at 190p each, representing 10% of the phone retailer’s existing share capital.
The group also confirmed plans to pull out of France today in a move that will impact around 1,100 staff employed across 250 stores.
It is taking a hit of between £80m to £90m on the failed French business, but said it was continuing to trade stores and hoped to secure a sale of some of the estate.
Carphone Warehouse Europe, which has around 13,000 employees, reported profits of £119m on revenues of £3.3bn in the year to March 31.
Fourth quarter figures revealed solid trading since Christmas, with UK like-for-like sales up 15% as it continues to be boosted by strong demand for tablet computers.
Comparable sales across the European retail arm as a whole rose 6.5% in the three months to March 31 despite the French woes.
Carphone shares leapt 13% higher, with independent retail analyst Nick Bubb saying Carphone secured a “fair price” with Best Buy and has delivered better than expected fourth quarter trading figures.